‘Pocket Listings’ – What Do You Think?
With inventory so scarce in many markets, some agents are not putting their listings on MLS and instead keeping them private to their company. This issue has created great debate. Many of our readers have reached out to me hoping I would give my thoughts on the challenge believing that I would of course agree with their position.
However, for the sake of open debate between our readers, I WILL NOT TAKE A POSITION ON THE SUBJECT. Instead, I will try my best to lay out the logic of both sides as it has been explained to me by agents over the last few months.
I am aware this blog post will generate passionate responses. But, I think an open and honest discussion is needed. (We will monitor comments to this post and IMMEDIATELY delete any comment we deem to be malicious or inappropriate.)
A few ground rules before we get started:
The term ‘pocket listing’ in itself has a negative connotation. For that reason, I will refer to a listing taken but not put on MLS as an ‘in-house exclusive’.
I will assume that this type of listing is permitted by your local Board of Realtors and the MLS. (Don’t assume it is not permitted without checking).
I will assume that the listing agent meet the disclosure requirements when discussing the option with the seller.
I realize there may be agents that don’t adhere to the requirements mentioned above. They are in violation of the Code of Ethics and therefore are OBVIOUSLY doing something improper.
However, some argue that these agents are still doing harm even if they meet the Code. I am discussing this second situation.
One Point of View
Any in-house exclusive damages the market and the parties involved.
Buyers are not fully aware of all the purchase options available to them. And as buyers discover this, they feel they must deal with every company to truly know what is available for sale. This destroys loyalty between the consumer and real estate professionals.
Sellers do not get maximum exposure and therefore are losing money on the sale of the home.
Other real estate professionals cannot effectively counsel their clients without access to all pertinent market information.
Comparable sales for use by an appraiser are already hard to find. This situation adds to the challenge.
The Other Point of View
In-house exclusives actually help the seller in a market with so many potential challenges throughout the transaction.
Agents on this side of the argument explain that an in-house gives the listing company absolute control of the transaction which benefits the seller.
Sellers are guaranteed that a well trained agent from the listing company is on the other side of the transaction. It eliminates that less than professional agent from being involved.
With the staggering shortage of inventory available, exposure is not as important as even a year ago. Selling prices will not be impacted.
The listing agent’s fiduciary responsibility is first to the seller not to the real estate community at large.
Those that I spoke to say they do put the listing on MLS once a transaction is ensured. Some said they did this at time of contract, others at the time of closing. (They do this for the sake of agent and company market share numbers). Therefore, they are available as comps for the appraisals on other sales in the area.
Well, there you have it. I am sure that I will be hearing from both sides of the argument complaining that I didn’t represent their position well and blindly favored the other side. As an umpire once told me: “You know you were fair when both teams hate you.”
Feel free to discuss the issue in the comment section below. Please be courteous and appropriate with your comments. This issue deserves intelligent and articulate debate.
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